| |
|
$1,500 cash advance!
Fast
Cash Today |
| |
|
What is APR?
The APR is a measure of the cost of credit, expressed as a yearly
rate. It also must be disclosed before you become obligated on the
account and on your account statements. The card issuer also must
disclose the periodic rate — the rate applied to your outstanding
balance to figure the finance charge for each billing period. Some
credit card plans allow the issuer to change your APR when interest
rates or other economic indicators — called indexes — change.
Because the rate change is linked to the index's performance, these
plans are called variable rate programs. Rate changes raise or lower
the finance charge on your account.
|
If you're considering a
variable rate card, the issuer must also provide various information
that discloses to you:
1 .When the rate may change
2 .How the rate is determined
3. Which index is used.
4. What additional amount, the margin, is added to determine your new
rate.
5. About any limitations on how much and how often your rate may
change. |
What is Grace Period?
A free period where no finance charges accrue, also known as a grace
period. A grace period lets you avoid finance charges by paying your
balance in full before the due date. Knowing whether a card gives you a
grace period is especially important if you plan to pay your account in
full each month. Without a grace period, the card issuer may impose a
finance charge from the date you use your card or from the date each
transaction is posted to your account. If your card includes a grace
period, the issuer should mail your bill at least 14 days before the due
date so you'll have enough time to pay.
What is Finance Charge?
Finance charge is a fee charged (interest) by the issuer of a credit card
beyond the grace period. It is charged if you choose to pay for purchases
or cash advances over time. It is important to know what method the issuer
uses to calculate your finance charge. This can make a big difference in
how much of a finance charge you'll pay over time. Finance charges are
regulated by state and Federal law. The lower the finance charge, the less
you will ultimately pay for a purchase over time.
How is Finance Charge calculated?
Examples of balance computation methods include the following:
- Average Daily Balance.
This is the most common calculation method. It credits your account from
the day payment is received by the issuer. To figure the balance due, the
issuer totals the beginning balance for each day in the billing period and
subtracts any credits made to your account that day. While new purchases
may or may not be added to the balance, depending on your plan, cash
advances typically are included. The resulting daily balances are added
for the billing cycle. The total is then divided by the number of days in
the billing period to get the average daily balance.
- Adjusted Balance.
This is usually the most advantageous method for card holders. Your
balance is determined by subtracting payments or credits received during
the current billing period from the balance at the end of the previous
billing period. Purchases made during the billing period are not included.
This method gives you until the end of the billing cycle to pay a portion
of your balance to avoid the interest charges on that amount. Some
creditors exclude prior, unpaid finance charges from the previous balance.
- Previous Balance.
This is the amount you owed at the end of the previous billing period.
Payments, credits and new purchases during the current billing period are
not included. Some creditors also exclude unpaid finance charges.
- Two-cycle Balances.
Issuers sometimes use various methods to calculate your balance that make
use of your last two month’s account activity. Read your agreement
carefully to find out if your issuer uses this approach and, if so, what
specific two-cycle method is used.
Are there any other fees?
Annual Fees.
Most issuers charge annual membership or participation fees. These fees
often range from $25 to $50 up to $100. Gold or Platinum cards often
charge up to $75 and sometimes up to several hundred dollars.
Some cards charge monthly fees, some charge a monthly fee whether or not
you use the card. Read your agreement before you accept a card!
Transaction Fees and Other Charges.
A card may include other costs. Some issuers charge a fee if you use the
card to get a cash advance, make a late payment, or exceed your credit
limit.
What is a Secured card?
A Secured card means that a security deposit account is needed to secure
your credit card. The security deposit amount will equal your credit
limit. There is nothing on the card that indicates it is a secured card,
it can be used exactly the same as an unsecured card. A secured card
offers all the convenience of an unsecured major credit card. Using the
credit card does not access your deposit, thus the money remains untouched
in the security deposit as long as your secured credit card account is
open. A secured card can be one of the best tools for starting or
rebuilding a favorable credit history.
What values to look for?
Credit terms vary among issuers. When shopping for a card, think about how
you plan to use it. If you expect to pay your bills in full each month,
the annual fee and other charges may be more important than the periodic
rate and the APR, and if there is a grace period for purchases. If you use
the cash advance feature many cards do not permit a grace period for cash
advances even if they have a grace period for purchases. It may still be
wise to consider the APR and balance computation method. Also, if you plan
to pay for purchases over time, the APR and the balance computation method
are definitely major considerations.
What to do when I lose my card?
If you lose your credit or charge cards or if you realize they've been
lost or stolen, immediately call the issuer. Many companies have toll-free
numbers and 24-hour service to deal with such emergencies. If you report
the loss before the card is used, you can’t be held responsible for any
unauthorized charges. If a thief uses your card before you report it
missing, the most you could usually owe for unauthorized charges is $50.
If you suspect fraud, you may be asked to sign a statement under oath that
you did not make the purchase in question.
What rights do I have?
Federal law protects your use of credit cards.
Prompt Credit for Payment.
An issuer must credit your account the day payment is received. The
exceptions are if the payment is not made according to the creditor’s
requirements, or the delay in crediting your account won’t result in a
charge.
Refunds of Credit Balances. When you make a return or pay more than the
total balance at present, you can keep the credit on your account or write
your issuer for a refund — if it’s more than a dollar. If a credit stays
on your account for more than six months, the issuer usually make a good
faith effort to send you a refund.
Errors on Your Bill.
Issuers must follow rules for promptly correcting billing errors. You
should get a statement outlining these rules when you open an account and
once a year. In fact, many issuers include a summary of these rights on
the back of your bill.
If you find a mistake on your bill, you can dispute the charge and
withhold payment on that amount while the charge is being investigated.
The error might be a charge for the wrong amount, for something you didn’t
accept, or for an item that wasn’t delivered as agreed. Of course, you
still have to pay any part of the bill that’s not in dispute, including
finance and other charges.
If you decide to dispute a charge:
Write to the creditor at the address indicated on your statement for
billing inquiries. Include your name, address, account number, and a
description of the error.
Send your letter soon. I suggest sending it return receipt to protect your
rights! It should reach the creditor within 30 days after the first bill
containing the error was mailed to you.
The creditor should acknowledge your complaint in writing within 30 days
of receipt, unless the problem has been resolved. At the latest, the
dispute must be resolved within two billing cycles, but not more than 90
days.
Anything else I should know?
You can negotiate with an existing card issuer for a lower rate. Call
customer service and ask!
Shop around for the plan that best fits your needs; Low annual fee if you
pay in full, low interest rate if you carry a balance.
Make sure you understand a card’s terms before you accept the card.
Pay bills promptly to keep finance and other charges to a minimum.
If you pay late your APR can be raised!
Hold on to receipts to reconcile charges when your bill arrives.
Protect your cards and account numbers to prevent unauthorized use.
Draw a line through blank spaces on charge slips so the amount can’t be
changed.
Tear up carbons.
Keep a record, in a safe place separate from your cards, of your account
numbers, expiration dates, and the phone numbers of each issuer to report
a loss quickly.
Carry only the cards you think you’ll use.
FIND OUT what's in your
CREDIT REPORT TODAY - so it's 100% ACCURATE TOMORROW.
Order a 3-BUREAU REPORT |
